Health Spending Leads Economic Growth

June 21, 2005 (PLANSPONSOR.com) - Even though
cost-shifting the increased expense of workplace health
coverage to employees has slowed the growth of such expenses
to single digits, a new study found that health spending is
still outpacing general economic growth.

The study
, published in the policy journal Health Affairs, asserted
the growth of health costs, when measured against the pace
of overall economic growth, will force patients to shell
out even more than they do now for insurance,
prescriptions, and hospital care.

The research found that health spending for Americans
with private medical insurance increased 8.2% in 2004 –
significantly ahead of the 5.6% advance in total domestic
spending on all goods and services.

“If health care spending continues to grow at a
significantly faster rate than workers’ incomes – and there
is every sign that it will – health insurance will become
unaffordable to more and more people,” said study author
Paul Ginsburg, president of the Center for Studying Health
System Change.

The study said that annual increases in health insurance
premiums have slowed, with average rate hikes for 2005
hovering around 8% to 10%, down from 12% the year before.
Spending grew 11.3% at outpatient hospitals, such as
specialty surgery centers and imaging facilities. At
traditional hospitals, spending was up 6.2% in 2004.

Prescription drug spending for patients with private
health coverage slowed for the fifth straight year,
climbing 7.2% in 2004, compared with 8.9% in 2003. This was
attributed to more generic and over-the-counter medications
for ailments that could previously only be treated by more
expensive brand-name prescription drugs.